Outcry over soaring Aus Post bulk mail prices

Bulk mail prices will soar by more than 13 per cent from March 31, as Australia Post uses its ACCC-approved 10c rise in basic postage to justify further hikes.

Direct mail operations are bracing for impact after this second rise in two years. Many in the industry fear advertisers will lower their volumes to fit budgets or even shelve their printed mail advertising altogether.

Bill Healey, CEO of Printing Industries, is outraged though unsurprised by the increases to bulk mail. Australia Post does not need to have changes in its bulk mail rates approved by the ACCC, though the prices have the potential to hit printers already smarting from rising paper costs in March.

Healey says surveillance by the ACCC on the price of bulk mail was cut in 2011 – meaning Australia Post is able to go ahead without the watchdog’s permission.

He says, “Bulk mail has always been a lucrative area for Australia Post because all of the preparation and pre-sorting work it has to do for ordinary mail items is carried out by bulk mail handling operators employing modern and efficient processes, at no cost to Australia Post.

“In return for these efficiencies, bulk mail has been charged at rates lower than ordinary mail.

“The removal of ACCC surveillance has allowed Australia Post to increase prices without taking into account the value of the bulk mail sector efficiencies it benefits from. As a result, the margin between the basic letter fee and other reserved services such as bulk mail has been significantly eroded.”

Presort mail, which makes up around 80 per cent of bulk mail volumes, is set to rise by an average of 11.6 per cent for regular delivery, and 6.5 per cent for slower surface mail.

Increases will be considerably more for small barcode direct tray mail delivery, which makes up to 90 per cent of presort volumes – same state delivery will jump 13.2 per cent to 59c, interstate by 13.5 per cent to 61.2c. For surface mail rates will rise 8.6 per cent to 52c same state, 9.6 per cent to 53.8c for interstate.

Residue mail, which accounts for up to ten per cent of presort volumes, will go up by 13 per cent to 63.4c.

Industry insiders report that Aus Post also plans to raise the price of print post mail, used for magazines and newsletters.

According to confidential Aus Post documents, prices could go up on June 2 by an average of 6.8 per cent for regular and 2.4 per cent for surface – with the products that matter to printers and their clients likely to go up much more.

Charity mail on the other hand will take its 11.3 per cent regular and 6 per cent surface rises split between two doses, on March 31 and September 31.

Australia Post blames the increases on falling mail volumes; it says it made a loss of $218m in its regulated mail business over FY2012-13, with letter volumes down by 6.4 per cent. Its parcel division, however, has raised prices by 55 per cent since 2009 and is highly profitable.

In February the PIAA smelled a rat after the ACCC’s approval of the basic postage rises.

Australia Post lodged its 60 to 70 cent rise intentions with the ACCC on January 30; the consumer watchdog gave the green light three weeks later – the PIAA believes this is not enough time to collect feedback from stakeholders who more keenly appreciate the value of print.

The association says it will push for restoration of the ACCC scrutiny of bulk mail pricing, and continue to advocate for Australia’s postal service to be opened up to competition.

The damage may already have been done for some print and mail outfits; Rodney Frost, general manager of Lamson Paragon, says one of his major advertisers is switching to electronic catalogues exclusively in 2015 as a result of the bulk mail rorts.

Frost says, “I’ll be surprised if this doesn’t accelerate the decline of mail volumes and the switch to non-physical delivery – and naturally if volume declines, printing demands will also feel the pain.”

Industry sources believe Australia Post is trying to get rid of its unprofitable mail business by pricing it out of the market.

Healey echoes the sentiment; he says Australia Post no longer believes in print and the market deserves to be opened up to competition. He says, “Australia Post has ignored its own evidence that print will remain a key part of the emerging multi-channel communication world. If we leave it to them they will ride print mail into the ground.”

GO TO MORE AUSTRALIA NEWS